E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit
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Asset-Price Misalignments and Monetary Policy: How Flexible Should Inflation-Targeting Regimes Be?
The authors analyze the extent to which inflation-targeting frameworks should incorporate flexibility in order to respond to asset-price misalignments and other atypical events. They examine the costs and benefits of adding flexibility to the Bank's current inflation-targeting framework, and conclude that maintaining low and stable consumer price inflation is the best contribution that monetary policy […] -
Liquidity, Redistribution, and the Welfare Cost of Inflation
This paper studies the long run welfare costs of inflation in a micro-founded model with trading frictions and costly liquidity management.